NorAm Drilling AS

Investor Presentation • Feb 21, 2023

Q4 2022 Presentation

F e b r u a r y 2 1 , 2 0 2 3

Disclaimer

This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including NorAm management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although NorAm believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, NorAm cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. The Company has not taken any steps to verify any of the information contained herein. No representation or warranty (express or implied) is made as to any information contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements. The Company does not accept any liability whatsoever arising directly or indirectly from the use of the materials.

The Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. Any such forward-looking statements are solely opinions and forecasts reflecting views as of the date set out on the cover of these materials, which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. No liability for such statements, or any obligation to update any such statements or to conform such statements to actual results, is assumed. Furthermore, information about past performance given in this Presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

This presentation and related materials speaks only as of the date set out on the cover, and the views expressed are subject to change based on a number of factors. The Company does not undertake any obligation to amend, correct or update the materials or to provide any additional information about any matters described herein, but reserves the right to amend, correct or update the materials and provide additional information.

Q4 2022 Highlights

Revenue

Utilization

EBITDA

• \$29.5 million including reimbursables
• Clean day rate(1) of \$28,006
• 99.3% utilization
• One rig transitioned from one client to another during the quarter without downtime
• DiamondBack acquired Firebird Energy
• \$11.4 million including non cash cost of \$0.4 million
• Operating and maintenance expenses in line with expectations

Net income • \$9.3 million

Backlog • Backlog at the end of Q4 was \$39.0 million

Recent Events and Outlook

Dividends • Three consecutive monthly distributions, totaling USD13.1m or NOK 3.05 per share

Positive day rate momentum

• One contract signed in January at higher rig rate than end of last year
• Current renewal discussions are at higher rates than Q4 2022
• Permian represents ~50% of US total

Rig count

• Effectively sold out of warm 'Super Spec' rigs in Permian
• Lower gas prices could impact US rig count and Permian supply
• Financial discipline among operators

Strong Market Fundamentals Driving Demand In Permian

5

Permian basin is in need of increased drilling activity

Drilled wells in the Permian basin (2014 – January 2023)

Capex spending has been limited for the last 2 years and oil E&Ps have maintained production by completing drilled wells

\$

As a result, DUCs¹ have drastically declined the past 2 years and operators are now forced to increase capex spending to maintain oil production

NorAm is in a unique position with all rigs reactivated, upgraded and in operation, whereas reactivation and new equipment is costly

Key Operational Figures

Selected operational and financial data

(All amounts in USD 1000s per day) unless noted	4Q 2022	3Q 2022	2Q 2022	1Q 2022
Rig operating days	1,005	1,001	949	785
Rig utilization	99.3%	98.9%	94.8%	79.3%
Rig metrics per day:
Dayrate (1)	28,006	25,201	21,477	19,805
Operating costs (2)	14,366	14,794	13,925	13,443
Direct margin	13,640	10,407	7,552	6,362
Operation and SG&A allocation (3)	1,936	1,920	2,072	1,618
Maintenance cap ex allocation (3)	203	430	81	513
Net cash flow	11,501	8,058	5,399	4,231
Reimbursements of "out-of-pocket" expenses	1,252	1,189	1,719	1,462

(1) Per rig operating day and excludes reimbursements for "out-of-pocket" expenses.

(2) Per active rig available and excludes reimbursements for "out-of-pocket" expenses. Excludes operating costs of rigs not active. (3) Per available days

• Full utilization and efficient operating structure generating record contributions
• Maintenance capex comprises of spares, trucks, drill pipe etc.

Income statement

(All amounts in USD 1000s)	4Q 2022	3Q 2022	2Q 2022	1Q 2022
Total Operating Income	29,541	26,535	22,274	17,096
• Full utilization and efficient operating structure Payroll Expenses	8,496	7,007	6,838	7,108
generating record contributions Depreciation of Tangible and Intangible Assets	4,771	4,769	4,700	4,639
Rig Mobilization, Service and Supplies	6,276	7,205	6,791	5,824
• Maintenance capex comprises of spares, trucks, Insurance Rigs and Employees	1,617	1,750	1,579	887
Other Operating Expenses	1,721	2,101	2,917	1,566
drill pipe etc. Total Operating Expenses	22,881	22,833	22,825	20,024
Operating Profit (+)/ Loss (-)	6,660	3,703	-551	-2,927
Net Financial Items	1,544	-1,759	-1,855	-1,803
Profit (+)/Loss(-) before Income Tax	8,204	1,944	-2,406	-4,730
Income Tax Expense	-1,097	408	1,148	-425
Net Profit (+)/Loss (-)	9,301	1,536	-3,554	-4,305

• Stable operating expenses
• Net financial income of \$1.5m after paying down the bond in November driven by interest and FX gains

Balance Sheet And Cash Flow Statement

(All amounts in USD 1000s)	4Q 2022	3Q 2022	2Q 2022	1Q 2022
Non current assets
Rigs and Accessories	86,312	90,132	94,375	98,420
Vehicles and Office Equipment	258	282	312	241
Current assets
Accounts Receivable	14,802	10,636	9,395	7,486
Other Receivable	1,336	1,686	1,748	694
Bank Deposits/Cash	13,098	19,138	10,449	11,596
Total Assets	115,806	121,873	116,279	118,436
Equity
Issued Capital	12,547	8,839	8,839	8,839
Share Premium	159,115	94,860	94,860	94,860
Other Shareholder Contribution	369	369	369	369
Other Equity	-67,456	-76,663	-78,199	-74,647
Total Equity	104,576	27,405	25,869	29,421
Non current liabilities
Deferred Tax	1,746	3,093	2,685	1,962
Bond Loan				80,000
Current Liabilities
Bond Loan		80,000	80,000
Accounts Payable	4,607	3,807	2,509	2,463
Tax Payable	250
Public Duties Payable	267	30	149	146
Other Current Liabilities	4,361	7,537	5,066	4,867
Total Liabilities	11,230	94,468	90,410	89,015
Total Equity & Liabilities	115,806	121,873	116,279	118,436

Balance sheet Cash flow statement

(All amounts in USD 1000s)	4Q 2022	3Q 2022	2Q 2022	1Q 2022
	8,204	1,944	-2,406	-4,730
Tax paid for the period
Net Profit (+)/Loss (-) Depreciation of fixed assets Change in accounts receivable Change in accounts payable Change in other current balance sheet items Net cash flow from operational activities Purchase of tangible fixed assets Net cash flow from investing activities Repayment of long term debt Issued capital Dividends Net change in cash and cash equivalent Cash and cash equivalents opening balance	4,771	4,769	4,700	4,639
	-4,166	-1,241	-1,910	-1,342
	800	1,298	46	-533
	-2,350	2,415	-852	1,993
	7,258	9,185	-421	27
	-926	-496	-726	-1,213
	-926	-496	-726	-1,213
	-80,000
	72,004
	-4,375
Net cash flow from financing activities	-12,371	0	0	0
	-6,040	8,689	-1,148	-1,186
	19,138	10,449	11,596	12,782
Cash and cash equivalents closing balance	13,098	19,138	10,449	11,596

Q&A